Kota crisis: Unacademy's teachers were among the highest-paid. Now they too face a pay cut

This U-turn comes within two years of the edtech startup recruiting some of the senior most teachers from rival Allen Career Institute at several multiples of their previous salaries.

Mint spoke to three senior teachers at Unacademy who, along with about 60 others, were informed of their salary cuts in mid-June over a video call . The firm that had recruited faculty members at a frenetic pace in 2022, is now facing a sluggish student admission numbers.

"So far 7,000 students enrolled in Kota this academic year, versus 10,000 last year," said a senior Unacademy faculty member who has taught in the coaching centre for more than two years. Some of the top teachers are yet to accept their new employment contract.

Unacademy did not respond to Mint's emails sent on Wednesday around noon and follow-up emails for more details on Thursday afternoon.

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Unacademy is not the only one impacted by the drop in student numbers this year. Allen Career Institute, one of the largest coaching centres in India, has chopped the fixed salaries for its 4,000-plus faculty and administrative staff by 20-40%. 

Reliable Institute, a unit of Allen specializing in coaching for top engineering schools, too, has slashed faculty pay, while rival PhysicsWallah has reassigned teachers to centres outside Kota.

These shifts in Kota come on the back of a 30-40% drop in student enrolments as parents prefer to send their children in the local centres of the same coaching institutes in states like Bihar, Rajasthan, and Madhya Pradesh. 

"Those branches now have stiff targets and often dissuade the candidates from coming to Kota, which so far was the largest coaching centre," said a chemistry teacher in one of the top institutes of Kota.

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Ironically, the teachers who were roped in at high salaries by Unacademy may now be forced to work at a pay scale similar to what they were earning at their previous employer. 

"If a teacher was recruited at 1.5x or 2 x salary in 2022, then a large chunk of it was paid at the time of joining and the rest was paid over the next two years. These teachers will have to take a 25% paycut," said a senior Unacedemy faculty hired from one of the rivals.

From a poaching war to pay cuts 

The year 2022 stands out as that is when poaching wars for teachers were at their fiercest in Kota since students were allowed to return to classrooms after about two years of pandemic-induced online coaching. 

The top institutes included Allen Career Institute, Unacademy, Vibrant Academy, Motion Education, Resonance Eduventures, Reliable Institute (now backed by Allen), BYJU's- owned Akash Institute, Career Point, PhysicsWallah (PW) and Bansal Classes.

Mint has learned that apart from salary cuts, the company has also laid off non-teaching staff across centres in India.  

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“They (Unacademy) plan to lay off anywhere around 5-10% of non-teaching staff across centres in India," said a senior company executive, on condition of anonymity. "They have begun this process with downsizing centres in the eastern and southern parts of the country and they plan to do the same for centres in the western India."

On July 2, Mint reported that Unacademy let go about 250 employees across departments, including 150 in sales after a performance review, and the rest as part of a recent restructuring exercise.

Multiple fundraises, multiple layoffs

Unacademy has gone through multiple rounds of layoffs since 2022, affecting at least 2,000 employees so far. In 2022-23, the test-prep platform trimmed its losses to ₹1,678 crore from  ₹2,847 crore in the year prior, but that was still nearly double its revenue of ₹907 crore that financial year.

Founded in 2015 by Gaurav Munjal, Roman Saini and Hemesh Singh, the edtech firm started as a YouTube channel making educational videos. It grew exponentially during the pandemic lockdowns, mirroring a growing trend towards online learning.

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So far, Unacademy has secured a total funding of $877 million from the likes of SoftBank Group, Temasek, Blume Ventures, Peak XV Partners, and Nexus Venture Partners. 

Unacademy last raised $440 million in a Series H round at a valuation of $3.44 billion, making it the second-most valued edtech company in the Indian startup ecosystem after Byju’s, based on its last external round valuation. 

Series H funding is referred to a late-stage funding round in the lifecycle of a startup.